Two leading Russian oil producers have announced a merger that they say will create the largest oil and gas group in Russia, as well as the fourth-largest private oil producer in the world.

Under terms of the deal, Russia's largest oil company, Yukos, will acquire an initial 20 percent stake in Russia's fifth-largest, Sibneft, at a price of $3 billion.

Both companies said in a statement that Yukos agreed to acquire the rest of Sibneft at a later date, in a transaction due to be completed by the end of this year.

Yukos President, Mikhail Khodorkovsky has been named the chief executive officer of the new company, to be known as the YukosSibneft Oil Company. He told reporters in Moscow that the merger creates a great deal of future potential for Russian oil and gas in the global energy market.

Mr. Khodorkovsky said the new company will focus its future efforts on regional development, such as in eastern Siberia and the Far East.

YukosSibneft will boast total reserves of around 19.4 billion barrels of oil and gas. The merging companies said in a joint statement that with daily output expected at just more than two million barrels, the new company will be, by far, the largest producer of crude oil in Russia.

On the global market, the statement said, it will rank behind only British Petroleum, ExxonMobile and Royal Dutch Shell.

Oil experts said the current Russian market leader, LUKoil, produces about 1.5 million barrels a day.

The YukosSibneft merger is expected to bring together six principal refineries in Russia, another one in the former Soviet republic of Lithuania and several other refining facilities in Russia and Belarus.

Oil and gas analysts immediately hailed the merger as remarkable and said it would only serve to strengthen the Russian oil industry's image among international investors.